Medicare, Social Security losing financial ground

The CBS Evening News (5/12, story 7, 0:25, Couric) reported, “Officials tonight say both Medicare and Social Security are under more stress because of the recession. The latest trustees report shows Medicare is due to run out of money in just eight years. Social Security, 20 years later.” NBC Nightly News (5/12, story 4, 0:30, Williams) noted that the development provides “more evidence of how hard the recession is hitting the federal budget.” ABC World News (5/12, story 3, 0:20, Gibson) also mentioned the new data, and reported that the programs “are in much deeper trouble than just a year ago.”

The AP (5/13, Crutsinger) reports that “Social Security and Medicare are fading even faster under the weight of the recession, heading for insolvency years sooner than previously expected.” Social Security “will start paying out more in benefits than it collects in taxes in 2016, a year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner, trustees reported.” Medicare, meanwhile, “is in even worse shape. The trustees said the program for hospital expenses will pay out more in benefits than it collects this year, just as it did for the first time in 2008. The trustees project that the Medicare fund will be depleted by 2017, two years earlier than the date projected in last year’s report.”

The Los Angeles Times (5/13, Levey) notes that “GOP lawmakers seized on the announcement to attack Democratic proposals to create a new government health insurance program that people could choose if they are unhappy with their private insurance options. Such a public option is a centerpiece of President Obama’s healthcare agenda.”

The Financial Times (5/13, Ward, subscription required) reports that the Administration “seized on the looming crisis facing the Medicare program to step up its push for reform of the broader US healthcare system.” HHS Secretary Kathleen Sebelius “said slowing growth in Medicare costs was crucial to broader reforms as the administration sought ways to extend healthcare to the 46 million Americans without insurance while containing the ballooning budget deficit.” Sebelius said, “The only way to slow Medicare spending is to slow overall healthcare system spending through comprehensive and carefully crafted legislation. … This report makes it clear: reform can’t wait.”

The Wall Street Journal (5/13, Farnam, subscription required) notes that the Administration “has proposed several ways to control Medicare costs, including cutting payments to private insurers and allowing the government to negotiate drug prices with pharmaceutical companies.” Still, “some of those cuts face resistance in Congress, which will need to approve them,” and “even if approved, the savings won’t come close to fully offsetting the increasing cost of the program. Many of the savings have already been reserved to pay for the administration’s plan to overhaul healthcare.”

In a front-page story, the New York Times (5/13, A1, Pear) reports that “the projected date of insolvency, a widely used measure of the benefit programs’ financial health, shows the immense difficulties Mr. Obama and Congress will face in trying to shore them up while also extending health coverage to millions of Americans.” Moreover, “a resumption of economic growth is not expected to close the financing gap. The trustees’ bleak projections already assume that the economy will begin to recover late this year.” The Washington Times (5/13, Dickson), CongressDaily (5/13, Condon, Hunt. subscription required), CQ HealthBeat (5/12, Reichard, subscription required), Reuters (5/13, Daly, et al.), and Bloomberg News (5/13, Fitzgerald) also cover the story.

One Response to Medicare, Social Security losing financial ground

It is said that recession started with bungling in the home loan segment and it is not surprising that insurance sector feels the worst with recession. No one knows for sure when the economy will improve?